Online loans: pros and pitfalls

The Internet is a powerful tool for securing loans online. Major lending companies are scampering to take their business online to capitalise on the increasing number of people who are borrowing online. But, what is it that makes online borrowing popular? Are there any pitfalls to the process? If you are contemplating making your loan application online, these are important questions to ask. To help you answer them, we explore online loans: pros and pitfalls.

Convenience of shopping

One of the biggest pros of online loans is the convenience they offer. You can shop for the best deals any time, 24 hours a day, from the comfort of your home. Loan applications involve going online, searching for different lenders, quickly comparing rates and filling a loan application from your PC.

Quick loan approval

A decision about your loan application is often conveniently reached within a few hours or sometimes within minutes of your applications. Most of the traditional loan application processes like credit checks are sometimes not required, which expedites the approval process and even allows for lending to borrowers with bad credit history.

Saves time, energy and money

Instance access to loan information and quick loan approval online ultimately saves you time, energy and money. Loan information that would have taken you weeks or even months to research and find is available at the click of a button. Also, the wide range of free information available online increases competition among lenders and keeps online loan rates and fees competitive.

Pitfalls

It is easy now to see why online loans are popular. However, you should not be carried away by all the bells and whistles of online loans. Like most things in life, online loan applications have some pitfalls that may not be obvious to everyone.

Security concerns

The biggest pitfall to getting loans online is the security concerns the process comes with. The Internet is filled with scams and con artists that rip off unsuspecting borrowers. It is sometimes difficult to tell much about the lending company and agents you identify on the Net. A lending company may have a fancy looking website, but on closer inspection you may discover the company is solely virtual and a one man-run operation.

You are advised to take every measure possible to ascertain the credibility of lenders online and to always exercise great caution when diverging your personal and financial information to lenders. This can help avoid falling victim of unfortunate experiences that happen online.

Cost

While it is true deals on the Internet are some of the most attractive, there still exists offers in the offline marketplace that beat any that exist on the Internet. It is good practice to locate a lending company online, but at some stage in your interaction with the company visit their physical offices. Many times the face-to-face, personalised service you get at a brick-and-mortar lending institution beats any you get online.